Harmoney more than halves annual loss

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Harmoney Corp, the country's biggest peer-to-peer lending platform, more than halved its annual loss as revenue climbed 63 per cent in its second full year of operation, and has since crossed $500 million lent through the portal.

The Auckland-based company posted a loss of $6.5m in the 12 months ended March from $14.2m a year earlier, its financial statements lodged with the Companies Office show. Revenue climbed to $14m from $8.6m a year earlier, while its biggest expenditure item - marketing - dropped 14 per cent to $7m and staff costs were flat at $6.3m.

The big revenue gains were from note fees charged to wholesale lenders, which soared to $3.6m from $491,000 a year earlier, while service and lender fees almost tripled to $2.6m. Platform fees charged for arranging loans through the platform dropped to $5.4m from $6.3m. Harmoney facilitated $216m of loans in the 2017 financial year, up from $178m a year earlier, and crossed the $500m mark in June.

"Economies of scale in a low-margin business and improvement in our unit economics have enabled us to drive strong revenue growth in readiness for our third full year of operation," chief financial officer Simon Ward said in a statement. "While a net loss has been registered, this has more than halved on last year, a significant outcome for a fintech company still in start-up phase in a new industry."

Harmoney got a head-start as the first mover in the market but is facing increased competition from the arrival of other licensed P2P lenders Squirrel Money, LendMe, Lending Crowd and PledgeMe, which also operates a crowdfunding platform.

Its operational cash outflow shrank to $4.5m in the year from $13m a year earlier, and $4.7m of money raised from share issues left it with $8.2m as at March 31.

The P2P lender said it broke even in the fourth quarter of the financial year, and while joint chief executive and biggest shareholder Neil Roberts said it was important to generate a positive cash flow in 2017, the firm was focused on building "a world-class team" and build "innovative new products".

"Harmoney is now uniquely positioned to leverage these results and initiate ground-breaking machine learning and automation into its product offering," he said.

Smaller rival Squirrel Money, a subsidiary of mortgage broker Squirrel Group, reported a loss of $566,000 in the year ended March 31, widening its deficit from $472,000 a year earlier, as an increased marketing spend offset a jump in revenue to $236,000 from $42,000 a year earlier.